By Paul R. La Monica
What do luxury Swiss watch makers and companies like Apple, Walmart and Coca-Cola have in common? Strong brand loyalty. That emotional connection, one strategist argues, could help shield leading consumer stocks from the worst effects of the artificial-intelligence revolution.
DataTrek Research made that case in a report Friday, arguing that just as companies like Rolex, Audemars Piguet and Patek Philippe adapted to the introduction of less expensive quartz watches from Seiko in the late 1960s by marketing their mechanical watches as a high-end status symbol, today's top consumer brands may be able to survive and thrive by touting how their products and services make customers feel.
"As investors weigh which sectors may be threatened by a new AI-powered offering, consider this simple approach: how emotionally connected are consumers to the people and products in question? No one has an emotional bond to enterprise software, and these companies' stocks are under pressure," said Nicholas Colas, co-founder of DataTrek Research.
Of course, there is a huge difference between a diamond-encrusted gold watch from Rolex and buying an iPhone -- or a 12-pack of Diet Cherry Coke at Walmart.
But Colas argues that there is a common thread. Consumer sentiment about today's top brands could keep them from succumbing to AI-driven disruption, much as Swiss luxury watchmakers survived the advent of cheaper mass-market competitors.
He also pointed to the way Detroit's Big Three automakers adapted in the 1980s and 1990s to competitive pressure from Toyota and Honda. General Motors, Ford, and Chrysler -- now part of Stellantis -- pivoted away from smaller sedans and toward pickup trucks, minivans, and sport utility vehicles.
"The entire U.S. auto industry could have failed in the early 1990s had it not been for their very conscious push into vehicles that were largely untouched by the disruption created by Japanese car companies," Colas wrote.
So what's the takeaway for investors? Colas said Apple, for example, has continued to profit from premium-priced gadgets "because it designs with consumers' emotional attachment as a core principle."
He added that while Amazon may not be as beloved a consumer brand as Apple, "it is hard to imagine the modern world without its now all but essential home delivery service for almost any item under the sun." Walmart and Costco also offer a similar level of convenience across income levels, Colas noted.
Coke, rival PepsiCo, and fast-food giant McDonald's are also examples of companies with "strong brand names in the eyes of consumers," Colas wrote.
He argues that the same dynamic applies to construction-equipment leaders Caterpillar and Deere, both of which have benefited from the so-called HALO -- heavy assets, low obsolescence -- anti-AI trade. Industrial stocks and the consumer staples sector are among this year's market leaders.
This strategy leans more on the "softer" side of stock analysis. Colas isn't arguing that these companies are compelling investments because their valuations are cheap or because they boast especially strong earnings growth or balance sheets.
"Harnessing the power of human emotions allows creative companies to soften or even entirely mitigate the impact of technological disruption, " Colas wrote.
Charles Lemonides, chief investment officer at hedge fund ValueWorks, agrees. He told Barron's that two consumer-oriented stocks he owns -- Instacart parent Maplebear and electric vehicle maker Rivian, which is backed by Amazon -- should also hold up despite shifts in technology.
"We are cognizant of trying to understand which companies could get run over by AI and those that have a value proposition for consumers," he said.
So while investors worry about AI's impact on software companies, legal firms, and financial-service providers, it may be time to look for businesses that make or sell tangible products and services that consumers will still want -- and feel attached to -- in an AI-driven world.
Claude and ChatGPT may be powerful, but they can't cook a burger and fries while you stream on Apple TV or Prime Video. At least not yet.
Write to Paul R. La Monica at paul.lamonica@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
February 27, 2026 12:25 ET (17:25 GMT)
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